Revise the Excel spreadsheet in Figure 8.3 to create a template for a decision with four alternatives
Question:
Revise the Excel spreadsheet in Figure 8.3 to create a template for a decision with four alternatives and four outcomes.
Figure 8.3
Transcribed Image Text:
A. D. E 1 Thompson Lumber (Dec Making Under Risk) 3 PAYOFFS Outcomes Maximize EMV High Moderate Low Best EMV choice is large plant 4 Alternatives 5 Large plant 6 Small plant 7 No plant 8 Probability demand demand demand EMV Choice $200,000 $100,000 $120,000 $86,000 Best $50,000 -$20,000 $48,000 $90,000 SO SO SO 0.3 0.5 0.2 Known probability for each outcome 6. 10 Best outcome S200,000 $100,000 $0 11 12 Expected Value WITH Perfect Information (EVWPI) = 13 Best Expected Monetary Value (EMV) = 14 Expected Value OF Perfect Information (EVPI) = $110,000 S86,000 $24,000 15 EVPI = minimum EOL 16 REGRET Outcomes Minimize EOL High Moderate Low demand demand demand Choice 17 Alternatives 18 Large plant 19 Small plant 20 No plant 21 Probability EOL SO $120,000 $24,000 S20,000 S62.000 so $110,000 0.2 Best Best EOL choice is same as best EMV choice. $110,000 $50,000 $200,000 $100,000 0.3 0.5
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Related Book For
Managerial Decision Modeling Business Analytics With Spreadsheet
ISBN: 9781501515101
4th Edition
Authors: Nagraj Balakrishnan, Barry Render, Ralph Stair, Charles Munson
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